Why the Baltic Dry Index Is Declining: Pro

The Baltic Dry Shipping Index, a leading economic indicator used by market insiders to gauge global demand for dry commodities, has been on the decline in the last two weeks. Is this an indicator of how the overall global economy is likely to perform in the future?

Doug Mavrinac, maritime equity research head at Jefferies, shared his insights.

“The big ship rates have decreased over the last few weeks,” Mavrinac told CNBC.

“Within that asset class—the number of big ships moving iron ore and coal to places such as Japan and Korea—that demand has remained consistent over the last few months,” he noted. “But we’ve seen a slight slowing in the number of big ships moving those commodities into China.”

Mavrinac said the slowdown has resulted in unwinding of port congestion and charter rates are now in line with 2011 expectations.